NEW DELHI: Belying expectations of uninterrupted economic growth, India’s GDP expanded only 7.1 per cent in the last financial year (FY17), compared with a robust 8 per cent growth in FY16, data
released by the Central Statistics Office on Wednesday showed.
Economic growth during
January-March 2017, the immediate quarter after the demonetisation move, too, slowed to a mere 6.1 per cent from 7 per cent in the year-ago period, confirming the fears that the note ban decision would stump growth at least in the short-term.
With this, India lost the tag of the fastest-growing economy in the world; China grew at 6.9 per cent in the comparable quarter.
“The GDP estimates clearly show the impact of the demonetisation. The real GDP for the fourth quarter expanded at 6.1 per cent as against market estimates of 7.1 per cent. Gross value added (GVA) expanded at 5.6 per cent versus market estimates of 6.7 per cent,” said Vaibhav Agrawal, head of research and ARQ at
Angel Research.
Most sectors, barring agriculture, showed deceleration in the aftermath of demonetisation. While manufacturing sector output in the fourth quarter slowed to 5.3 per cent from 12.7 per cent in the year-ago period, the construction sector slipped into the negative territory.
Agriculture remained the lone bright spot as it posted an impressive 4.9 per cent growth on the back of good monsoon during 2016-17 compared with 0.7 per cent in the previous year.
The CSO, though, maintained its earlier full-year growth estimate for 2016-17 at 7.1 per cent against eight per cent in the previous year.
Reacting to the latest data, Assocham President Sandeep Jajodia said, “One only hopes that the impact of note ban has played out and does not spill into the current financial year.” That is unlikely, according to Agrawal of Angel Broking. “We do not expect demonetisation impact to spill over in FY18 as multiple sectors are showing signs of recovery as well as a positive thrust from the normal monsoon.”